According to the assignment rule, which of the following policy mixes is appropriate for a country with excessively low unemployment, a balance of payments surplus, and fixed exchange rates?
A. Contractionary fiscal policy and expansionary monetary policy
B. Expansionary fiscal policy and expansionary monetary policy
C. Contractionary fiscal policy and contractionary monetary policy
D. Expansionary fiscal policy and contractionary monetary policy
Answer: B
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Assume a unit tax of $4 is placed on suppliers. They are able to pass along some of the tax to suppliers as evidenced by prices rising from $5 per unit to $7 per unit. Output declines from 10 units to 8 units
What is the ratio of the demander's share of the tax burden to the suppliers? a. 2.5 b. 2.0 c. 1.5 d. 1.0
If the price of inputs rises and foreign income rises:
a. Price index rises, and the change in real GDP is uncertain. b. Price index falls, and real GDP rises. c. Price index falls, and real GDP falls. d. Price index falls, and the change in real GDP is uncertain. e. The change in price index is uncertain, and real GDP rises.
Figure 34-9
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In Figure 34-9, at price OC
A. quantity supplied of pasta exceeds quantity demanded so price will fall. B. quantity demanded for pasta exceeds quantity supplied so price will rise. C. exports of pasta equal XY. D. imports of pasta equal XY.
The nominal interest rate in the U.S. is 5% and the nominal interest rate in Canada is 3%. The spot value of the U.S. dollar is 1 ($/Canadian dollar) and the forward rate is 1.2 ($/Canadian dollar). Which of the following is NOT true?
A) The dollar is likely to appreciate in spot markets. B) The interest parity condition does not hold. C) The dollar is trading at a forward discount. D) Money will flow into the Canada.